The e-commerce giant made a big move to fend off a potential threat.
Shares of Amazon (AMZN 2.21%) rallied today, up as much as 3% before retreating to a 2.2% gain as of 2:52 p.m. ET. Still, the e-commerce and cloud giant touched an all-time high on a day in which the Nasdaq Composite was in the red.
That impressive outperformance came on the heels of the company’s announcement of a low-priced e-commerce store to combat Chinese rivals Shein and Temu.
Amazon doesn’t sleep on the competition
Today, Amazon announced Amazon Haul, a storefront specifically focused on low-priced items below $20, with the majority under $10. The new store is a mobile-only feature, which will be installed when you update your Amazon app, and will have items that ship directly from warehouses in China. Even though the company is setting up low-priced items, Amazon will still give its “A-to-z Guarantee” on all items, which protects customers from damaged or defective products, and will retain a 15-day return policy for items that cost over $3 and free shipping for orders over $25. The store is launching in beta, or testing, right now, within the U.S.
Amazon dominates e-commerce in the U.S., but still faced concerns over competition from ultra-low-cost goods on Chinese apps, which ship directly from warehouses in China but may take two weeks or longer to arrive. However, the launch of Haul seems to have reassured investors that Amazon isn’t sleeping on this threat. And given the successful cost efficiencies CEO Andy Jassy has implemented in Amazon’s e-commerce business over the past year, it’s a good bet Amazon will find a way to make the new store profitable, too.
Amazon is having a good run
Amazon is coming off a better-than-expected earnings report and positive news across its business, including Amazon Web Services for AI computing. Now with its continued innovation on the e-commerce front, the company appears to be firing on all cylinders.
The stock remains a solid hold for existing investors, while those who don’t own shares may wish to think about taking a position, even at all-time highs.
John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Billy Duberstein and/or his clients have positions in Amazon. The Motley Fool has positions in and recommends Amazon. The Motley Fool has a disclosure policy.
